BMR Edge-Tax & Regulatory Mont - BMR Advisors

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The taxpayer was a private limited company registered with the Software Technology Park of India (“STPI”) providing various back office services to their overseas group entity such as lead tax services, international assignment services, etc. The taxpayers got registered under the categories of ‘business auxiliary service’ and ‘management consultancy service’. On March 31, 2006, they applied for a refund under Rule 5 of the Cenvat Credit Rules, 2004 of various input services such as equipment hiring charges, professional consultation service, recruitment service, security service, etc used in relation to export of their output services. According to the Revenue Authorities, the taxpayers were infact engaged in ‘export of software’ which is a non-taxable service against which no CENVAT credit shall be available. Also, as per the Revenue Authorities, the input services declared by the taxpayers did not appear to have any nexus with the output services provided by them and therefore the taxpayers are ineligible to avail input service credit. Accordingly, the claim of the taxpayers for refund was rejected. The matter finally reached the Andhra Pradesh HC. Besides the above contentions, the Revenue Authorities relied upon the decision of Bangalore Tribunal in the case of Gandhi and Gandhi Chartered Accountants v Commissioner [2010-17-STR-25 (Tri- Bang)] which was confirmed by the SC wherein it was held that the activity of computerized data processing for filing and accounts management qualifies as ‘Information Technology Service’ and is excluded from ‘Business Auxiliary Service’. The Andhra Pradesh HC held that activities performed by the taxpayers are not in relation to computer systems, which is also supported by the ‘SOFTEX’ forms submitted by them to STPI wherein they have mentioned that they export ‘services’ only and not ‘software’ and they have declared their exports as ‘others-Back Office Services’. The HC further held that reliance may not be placed on the decision in Gandhi and Gandhi's case, wherein it appears that the Tribunal did not consider the words ‘primarily in relation to computer systems/programming’ while giving its decision. The fact that the said decision was confirmed by a non-speaking order by the SC does not mean that the reasoning in the order of the Tribunal was approved by the SC. Accordingly, the position of the taxpayers was upheld. CC&E v Deloitte <strong>Tax</strong> Service India Pvt Ltd (2012-TIOL-954-HC-AP-ST) Customs Once the end use condition stipulated under the Project Import Scheme with respect to the goods imported has been fulfilled, the benefit under the said scheme cannot be denied in case of non-compliance with the procedural requirements under the said scheme in time The taxpayer had imported Heat Recovery Steam Generators under Chapter 98.01 of the Customs Tariff Act, 1975 (“Custom Tariff Act"). The taxpayer had furnished a certificate from a Chartered Engineer certifying that the said goods have been installed as per the provisions of the Project Import Regulations, 1986 (‘Import Regulations’). Additionally, the Assistant Commissioner of Central Excise, Kakinada had furnished a letter certifying that the goods imported had been installed as per the contract. The taxpayer had submitted the reconciliation statement in terms of Regulation 7 of the Import Regulations after nearly two years of the last consignment The Assistant Commissioner of Customs, Kakinada finalized the assessments for the bills of entries after denying the benefit of concessional rate of customs duty under the Import Regulation on the ground that the taxpayer had violated Regulation 7 of the Import Regulations. Subsequently, the said order was affirmed by the Commissioner (Appeals) and held that the taxpayer had failed to satisfy a substantial condition of submitting the reconciliation statement within 3 months of import or extended time provided by the authority. The taxpayer in the appeal to the Tribunal, amongst other decisions, relied on the decision of SC in the case of Mangalore Chemicals and Fertilizers Ltd v Deputy Commissioner [1991 (55) ELT 437 SC], and pressed on the fact that it was a settled law that a substantial benefit could not be denied for violation of procedure. The Tribunal held that since the Assistant Commissioner of Central Excise, Kakinada had already certified that the goods under question have been installed in the factory premises, the demand of differential duty could not have been raised validly on the ground of non-compliance of a procedural requirement specified under the Import Regulations. Alstom Projects India Ltd v CC Visakhapatnam [2012 (286) ELT 235 (Tri– Bang)] Circulars / Notifications Customs Notification No 61/2012-Customs further deepens the tariff concessions in respect of goods imported from Singapore under Comprehensive Economic Cooperation Agreement between India and Singapore
Source: Notification No 61/2012-Customs dated December 18, 2012 Link: http://www.cbec.gov.in/customs/cs-act/notifications/notfns-2012/cstarr2012/cs61-2012.htm Export incentives Notification and Public Notice from DGFT has introduced the Incremental Exports Incentivization Scheme’. The objective of the scheme is to incentivize incremental exports achieved by an Importer Exporter Code (“IEC”) holder by providing an additional duty credit scrip at 2 percent of the Free on board (“FOB”) value of incremental exports done during the period January to March 2013 as compared to period January 2012 to March 2012. Source: Notification No 27 (RE-2012) / 2009-2014 and Public Notice No 41/2009- 2014 (RE-2012) both dated December 28, 2012 Link: http://164.100.9.245/Exim/2000/NOT/NOT12/not2712.htm
Page 1 and 2: Vol.8 Issue 1.4 December 2012 About
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Page 7 and 8: The taxpayer, a foreign partnership
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Page 13 and 14: Show cause notices were issued to t
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